"Thus it is said that one who knows the enemy and knows himself will not be endangered in a hundred engagements."
Sun Tzu, The Art of War.

Friday, December 30, 2011

Innospec Agent Sentenced to 30 Months in Prison for Bribing Iraqi Officials and Paying Kickbacks Under the U.N. Oil for Food Program

WASHINGTON – A former agent for Innospec Inc., a U.S. company, was sentenced today to 30 months in prison and ordered to pay a $250,000 fine for his participation in a conspiracy to defraud the United Nations Oil for Food Program (OFFP) and to bribe former Iraqi government officials in connection with the sale of a chemical additive used in the refining of leaded fuel, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.

Ousama Naaman, 62, of Abu Dhabi, United Arab Emirates, was indicted on Aug. 7, 2008, in U.S. District Court for the District of Columbia. Superseding charges were filed on June 24, 2010. Naaman was arrested on July 30, 2009, in Frankfurt, Germany, and extradited to the United States. He pleaded guilty on June 25, 2010, to one count of conspiracy to commit wire fraud, violate the Foreign Corrupt Practices Act (FCPA) and falsify the books and records of a U.S. issuer, and one count of violating the FCPA.

Naaman and his companies were the Iraqi agents of Innospec Inc. On March 18, 2010, Innospec pleaded guilty to a 12-count indictment charging wire fraud in connection with its payment of kickbacks to the Iraqi government under the OFFP, as well as FCPA violations in connection with bribe payments it made to officials in the Iraqi Ministry of Oil.

F rom 2001 to 2003, acting on behalf of Innospec, Naaman offered and paid 10 percent kickbacks to the then-Iraqi government in exchange for five contracts under the OFFP. Naaman negotiated the contracts, including a 10 percent increase in the price to cover the kickbacks, and routed the funds to Iraqi government accounts in the Middle East.

In addition, Naaman admitted to paying and promising to pay more than $6.8 million in bribes from 2004 to 2008, in the form of cash, travel and entertainment, to officials of the Iraqi Ministry of Oil and the Trade Bank of Iraq to secure sales of tetraethyl lead in Iraq, as well as to secure more favorable exchange rates on the contracts. Naaman provided Innospec with false invoices to support the payments, and those invoices were incorporated into the books and records of Innospec. Naaman earned $2.7 million in commissions on the contracts and would have earned an additional $5.3 million had the final contract not been halted as a result of the investigation.

In addition to bribes actually offered and paid to Iraqi officials, Naaman convinced Innospec to pay him $750,000 for additional bribes that Naaman never paid, instead keeping the money for himself.

Naaman separately settled civil charges on Aug. 5, 2010, with the U.S. Securities and Exchange Commission (SEC) for the same misconduct. Naaman disgorged $877,096 in profits and prejudgment interest in connection with the settlement. The SEC civil penalty of $438,038 will be satisfied in part by his criminal fine.

The case was prosecuted by Trial Attorney Kathleen M. Hamann and Assistant Chief Nathaniel B. Edmonds of the Criminal Division’s Fraud Section. The case was investigated by the dedicated FCPA squad at FBI’s Washington Field Office and the Counter Proliferation Investigations Unit of the Washington Field Office of U.S. Immigration and Customs Enforcement. Significant assistance was provided by the Criminal Division’s Office of International Affairs and the SEC’s FCPA Unit.

The Innospec matter has been investigated with assistance from the SEC and in cooperation with the Department of the Treasury’s Office of Foreign Assets Control and the United Kingdom’s Serious Fraud Office.